Marriott raised its offer to buy Starwood Hotels, snatching it back from a huge Chinese insurer

The Starwood-Marriott merger is back on track to create the
world's largest hotel chain.

Marriott announced Monday that it raised its offer to buy
Starwood Hotels; Starwood's prior best proposal had come from a
group of companies led by the Chinese insurer Anbang.

In a
statement, Marriott said both companies amended their
original agreement announced in November.

Marriott would now offer Starwood shareholders $21 in cash and
0.80 shares of its common stock for each Starwood share owned.

This equals a $13.6 billion valuation for Starwood, whose brands
include Sheraton and the Westin.

Everything is still subject to shareholder approval.

The news comes after Starwood announced a
binding, superior offer with Anbang on Friday that would have
it acquired for $78 a share in cash, or $13.23 billion. Marriott
had five days to respond.

Marriott CEO Arne Sorenson said in the statement that the
combined companies expected to achieve as much as $250 million in
annual cost-saving synergies through the deal. The first
agreement had pegged this at $200 million.

Starwood shares rose 3% in premarket trading.

Here's a graphic from Marriott and Starwood showing what the
scope of a combined company would look like.